Real Estate Investing with Coach Carson #394: How much cash do you need for rental property reserves? (rule of thumb)
Mar 21, 2025
Discover the vital role of cash reserves for rental properties and how too little can lead to trouble. Learn from personal experiences during the 2008 recession, as well as practical strategies for striking the right balance. Explore effective cash management techniques, including maintaining separate accounts. Finally, find out how joining a supportive community can enhance your skills and help you achieve financial independence in real estate investments.
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Real Estate's Illiquidity: A Double-Edged Sword
- Real estate, unlike stocks, is illiquid, meaning it's harder to quickly convert to cash.
- This illiquidity can be advantageous by encouraging long-term investing and discouraging impulsive selling during market downturns.
2008 Recession Experience
- During the 2008 recession, Chad Carson and his business partner faced financial challenges due to underestimated repair costs and bad locations.
- Having substantial cash reserves saved them from potential ruin during this crisis.
Initial Cash Reserve
- Set aside at least $5,000 per rental property in a savings account as a starting point.
- This helps cover unexpected expenses like plumbing or HVAC repairs without resorting to debt.